UK weighs sanctions options to punish Russia over attack

As Theresa May weighs retaliation against Russia for the attack on the Russian double agent Sergei Skripal and his daughter in Salisbury last week, the British prime minister faces a dilemma: how far can she go to ensure she inflicts pain on Moscow while at the same time not hurt Britain’s economic and diplomatic interests.

Mrs May’s cabinet met on Tuesday morning to consider Britain’s next move. The prime minister has already signalled her willingness to take steps which are more than a gradual ratcheting up of pressure on the Kremlin.

The range of options open to the UK include a British equivalent of the US Magnitsky Act, which would enable the freezing of assets of Russian individuals connected to rights abuses, a range of tougher economic sanctions, cancelling the UK broadcast licence of Russian state broadcaster RT and withdrawing British dignitaries from this summer’s World Cup in Russia.

The question is whether these moves will have the desired effect of bringing about a real and lasting change to the behaviour of an increasingly aggressive Russia under the leadership of President Vladimir Putin.

The experience of the past four years suggests otherwise. Following Moscow’s annexation of Crimea in early 2014, the US and EU slapped travel bans and asset freezes on Russian government and security officials, and others close to Mr Putin who may have influenced the decision.

The US soon added a ban on transactions with some Russian companies and their executives.

Western countries also banned energy and infrastructure-related lending and investment for projects in Crimea or to entities linked to the annexed peninsula.

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Later that year, after Russia started kindling a separatist conflict in eastern Ukraine, the US and EU tightened the screws by barring all but short-term financing to a wide array of Russian energy companies and banks, restricting technological supplies for and investment in Russian shale and Arctic offshore oil projects and sanctioning Russian defence companies and dual-use goods.

“Although those measures looked massive at the time, the sanctions amounted to a net positive for the Russian economy,” said Chris Weafer, a senior partner at Macro Advisory, a Moscow-based consultancy firm. “The oil price drop-induced downturn would have been much sharper if sanctions hadn’t forced Moscow to adopt policy measures they would otherwise have avoided.”

The financial sanctions forced both Russian companies and the Russian government to sharply reduce foreign borrowing and become more efficient.

The US government’s hope that, under the financial pain of sanctions, some members of the Russian elite would lean on Mr Putin to change course has not been fulfilled. “If anything, the opposite is true: He has doubled down,” said a European diplomat.

Many Russian officials hit by targeted sanctions have demonstrated their loyalty to Mr Putin by saying that they feel honoured to be on the list. State companies and businesses controlled by members of Mr Putin’s inner circle have received state support to soften the blow from sanctions.

The Russian ambassador to the UK, Alexander Vladimirovich Yakovenko © Getty

So what cards does Mrs May have to play?

One senior Whitehall official said the likely first step would be a “significant” number of diplomatic expulsions to “purge the embassy of its knowledge base and connections”. This could include Alexander Yakovenko, Russia’s ambassador to the UK, but the official warned there would be an inevitable Russian “retaliation”, raising questions over the effectiveness of such a move.

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Observers in Russia see the UK’s only potential leverage in the large amount of Russian assets in Britain. One way to clamp down on Russians holding assets in the UK and visiting the country could be a UK version of the Magnitsky Act.

But critics in the US have questioned its effectiveness while the UK has already passed an amendment to the 2002 Proceeds of Crime Act which gives Britain similar powers.

Apart from prominent Russian billionaires such as Roman Abramovich, owner of Chelsea Football Club, many Russian government officials, MPs and state enterprise managers have second homes in London, have their children in schools there or hold British passports.

Russian opposition activists say targeting illicit wealth among that group would be a more effective means of creating a real impact.

However, one person who advises oligarchs on overseas investment said British sanctions could cause a backlash in Russia against tycoons who are known to eye additional investment in the UK, such as Mikhail Fridman, co-founder of Alfa Bank.

One other drastic option would be to restrict the access of Russia’s banks to the Swift payments system, although this would need international backing.

Beyond financial sanctions and diplomatic steps, the UK may look to use soft power to hit Mr Putin’s regime.

Boris Johnson floated the possibility last week of an England boycott of the World Cup in Russia this summer. Officials later rowed back, suggesting the foreign secretary meant a bar on UK dignitaries attending.

By Tuesday afternoon, the Football Association, the body responsible for sending the England team to the World Cup, said there had been no conversations with the government about a possible boycott.

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One senior UK football official said such a move would leave English football isolated internationally and would make little difference to Mr Putin. “The Russians won’t be bothered if we unilaterally pull out,” the official said. “I just don’t know where it gets you.”

Ofcom, the UK’s media regulator, suggested it would revoke RT’s UK broadcast licence if London determined the Russian state had made an unlawful use of force since Moscow might no longer be regarded as a fit and proper owner.

Of all options to emerge since Mrs May’s statement to the Commons the least likely would seem to be a retaliatory cyber strike against the Russians, who are feared to possess far greater cyber offensive capabilites.

Robert Hannigan, former head of UK digital intelligence agency GCHQ, said “The key is that we are responsible actors, in cyberspace as in the physical world. We need to do what is lawful, ethical and proportionate in cyberspace: that’s what makes us different from Russia.”

Additional reporting: Max Seddon and Henry Foy in Moscow


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